Law Dean's Obscene Salary Raises Questions

You wonder why the cost of higher education is going through the roof?

The Boston Globe recently reported that John F. O'Brien, dean of New England Law, Boston — formerly the New England School of Law — rakes in $867,000 a year in salary and benefits, believed to be the highest salary paid to any law school dean in the country. His compensation included a "forgivable loan" that he used, in part, to buy a condominium in Florida.

The school, however, is not among the highest-rated law schools in the country, or in Greater Boston, for that matter. US News & World Report does not include it in its ranking of 145 best law schools in the nation, leaving it among about 50 whose ratings don't make the cutoff and are not published.

Although they pay tuition of more than $40,000 a year, only 34 percent of students in New England Law's 2011 graduating class were able to land jobs requiring a law degree within nine months of graduating, the Globe reported, citing American Bar Association data, compared with 68 percent at Boston College Law School, and 90 percent at Harvard Law. The national average was 55 percent.

The newspaper cited a study that indicates Mr. O'Brien's salary is three times that of the median salary for law school deans. According to the state's website, the dean of the University of Connecticut School of Law made $305,000 in salary and benefits last year.

The exorbitant salary paid to Mr. O'Brien raises a number of issues, financial and ethical. The recession has led to one of the most challenging job markets for lawyers in decades. The market has driven down law school applications nationally — including a 9.6 percent drop at New England Law since 2006.

But New England Law has prospered, the Globe reported, by raising tuition and lowering standards for admission, a strategy followed by some other law schools around the country. One hopes that students and parents, if they are paying the bills, understand what they are getting into. And if no job means the student cannot pay back a government-backed student loan, the taxpayers are getting the short end. If the job market is shrinking, shouldn't law schools be cutting back?

The school, like most institutions of higher learning, is a nonprofit, charitable institution. If it can afford to pay salaries such as this — the Globe reports that New England Law's revenues were $10 million above expenses last year — does it need the benefits of nonprofit status? Does Harvard, for that matter? Is "wealthy nonprofit" an oxymoron?

If Congress can bestir itself to change in the national embarrassment known as the tax code, it might be time to the rethink the tax status of wealthy nonprofits. The IRS does have "excess benefits transaction rules" that can be applied to overly generous benefits paid to leaders of nonprofit entities, but the rules are complex and apparently rarely utilized.

There has to be more transparency and scrutiny of higher education costs, something more easily achieved in the public sector than at private, stand-alone law schools. New England Law board members — who until recently were generously compensating themselves — defended Mr. O'Brien's compensation, saying that they are paying top dollar for top talent. Mr. O'Brien has been at the school for 25 years and is considered a great networker. They couldn't have gotten a good dean for half the salary? And why is the school giving him a loan? Is it a bank?

Executive compensation is a broader issue, to be sure, and the big numbers are not in education. In public companies, the SEC has at least started requiring nonbinding shareholder votes on executive compensation. It's something. Some means must be found, some competitive forces introduced, to bring the costs of higher education under control, lest the U.S. lose its preeminence in this vital area.